I’ve never been a fan of the term ‘financial huddles’ as I prefer financial debriefs, Financial Impact Circles™, or MBRs (monthly business reviews) instead. However, many business owners are familiar with financial huddles, so I’ll stick to this term.
I don’t have stats to back up this claim, but I’m assuming that most company CFOs run the financial huddles for firms that choose to have these monthly meetings. The typical meeting cadence goes something like this:
- A description of what happened per the company financials and its most important non-financial indicators.
- A short list of the current trends the management team has observed.
- A quick take on what could happen in the months to come.
- Q&A between the CFO and the audience of employees (the CEO generally participates in these discussions).
Regarding that fourth item, the Q&A, let’s make that CFO earn his/her keep for the month with some great questions that will add to your confidence in the business you are serving.
Background for this Article
I used to write frequently on the Quora platform. I received a Top Writer award in 2018, and I have nearly 7 million views on my answers since I started answering questions on Quora.
One of my favorite answers is to the question, “What are good questions to ask a CFO at an all-hands meeting?” This article is based on my response.
Incidentally, I wrote that article more than five years ago. After reviewing it for this article, I still would not change anything to that answer.
The Five Questions for a CFO
In 2018, I fielded a question on Quora about what to ask a CFO at an all-hands meeting. All-hand meetings are something I’m very familiar with. One of my all-time favorite clients holds these quarterly for its entire employee base of about 60 staff members. My answer also applies to monthly financial huddles.
I admire and appreciate CFOs who are willing to field questions from employees where transparency exists around strategies, financials, and competitive forces, both good and bad.
If you participate in such meetings and are not sure what to ask the CFO, here are my five favorite questions:
- From your financial perspective, what are your greatest concerns about our company, and why?
- What are the 3–5 key drivers to success in this business that you watch the most? Do you stress-test those drivers, and if so, what do the numbers look like?
- How would you describe our financial health right now? Why?
- Any concerns with our banking relationships? And are we okay from a liquidity standpoint in the short- and mid-term?
- If the company is growing fast, “Do we have the funds to keep up with the growth?” If the business is not growing fast, “Is our business position sound, or is competition starting to eat into our sales?”
If I have one qualm with the majority of CFOs I observe at these meetings, it’s their poor cash flow acumen. I hear EBITDA a lot. I rarely see working capital management addressed which is one of the largest expenditures and investments on a company balance sheet. And I never see OCF (operating cash flow) compared to debt service expressed as a multiple. Instead, the focus is on the P&L only, which is a symptom of the poor financial intelligence of the CFO.
Accordingly, that’s why I’ve added the third question on financial health. Make sure you hear a clear explanation that includes OCF, FCF (free cash flow), and debt service in the response to this question.
It’s now my turn for a question. What are you going to ask that’s not on this list?